Arlington Heights budget reflects improving economy, but problems still loom

An improving economy has allowed the Village of Arlington Heights to significantly shrink their debt service and avoid laying off employees for the first time since 2009, according to the citys budget released on Wednesday. But bloated pensions, late payments from the state, and the cost of fighting the Emerald Ash Borer beetle have put pressure on the citys finances, according to the budget. The budget, which details the citys finances for the fiscal year 2012-13, shows that the Villages total expenditures amount to $137.4 million, a 13 percent decrease from 2011. The budget indicates that shrinking debt service requirements, which Village Manager William C. Dixon said are a result of historically low interest rates and two bond refinancings, largely drove the decline. Debt service represents the amount of money the Village needs to repay interest and principal on debt on a yearly basis. According to the budget, Village debt service requirements have decreased by 12 percent since last year, dropping from $8,556,414 to $7,570,027. Outstanding bond debt, or the total amount of principal payments the Village will owe on all its issued bonds, has fallen from $59.2 million to $53.7 million, the budget indicates, a decrease of 9 percent from last year. The citys employment numbers also represented a bright spot in the budget. After posting a 10.5 percent decrease in workforce since 2009, the Village avoided laying off any workers in 2013, according to the budget. The budget shows that the Village currently employs 417 full-time employees, the same number as were employed last year. This marks the first time in three years that the Village saw no net decrease of employees, although the position of Director of Building Services was eliminated, according to the budget. That cut was offset by the addition of a Forestry position that was created to address the Villages Emerald Ash Borer problem, the budget indicates.

Several factors have strained the Villages finances, including ballooning pension and benefits costs, which make up the Personal Services section of the General Fund. Personal Services costs over all funds have risen by 10 percent since 2009, from $63.2 million to $70.2 million, and account for 79 percent of the General Funds total expenditures, according to the budget. Dixon cautioned against pension cuts, however. [Retirees] rightfully earned those pensions, said Dixon. Well just have to figure out a way to divert funds. That may prove difficult, as the state of Illinois has been falling behind on its income tax receipts payments, which the budget says constitutes 9 percent of the General Funds revenue. Normally, the state collects income tax and reimburses the Village at a rate of 1/10th per capita within one or two months. But due to Illinois large debt burden, the payments have been delayed up to three months. By far the largest new expenditure for the Village is the Emerald Ash Borer Fund, which funds the removal and replacement cost of Ash trees infected with the Emerald Ash Borer beetle. The budget indicates that the fund cost only $53,000 in 2011, but rose 613 percent to $378,300 in 2012, while revenue fell to zero. The Village is home to an estimated 13,000 Ash trees, according to Dixon, and the Village pays the full cost for removing them but splits the costs with homeowners if they decide to treat the tree. This was an unwelcome guest in our town, said Dixon. Never in my 30 years of being Village Manager have I had a thing come out of left field to impact my budget.